Elite Chinese Politics and Political Economy

My name is Victor Shih, currently an assistant professor of political science at Northwestern University specializing in Chinese politics. This blog shares my musing and discussions on Chinese politics and political economy with interested readers. You can contact me at vshih AT northwestern.edu, and my website, where I post my recent research is: http://faculty.wcas.northwestern.edu/~vsh853/

Wednesday, March 07, 2007

Lou Jiwei, a close protege of former Premier Zhu Rongji, has been promoted to the deputy secretary general of the State Council yesterday. This means that he and the investment organ he leads, will not be a puppet of the MOF or the PBOC, but will have the same rank as the two agencies. Also, as deputy secretary general, you are literally suppose to serve as the secretary for the premier or a vice premier, so is Lou's appointment in name only to give him the administrative cloute, or will he report to the next Vice Premier in charge of finance? Issues to work out: who will sit on the board (will there be a board?); how large will it be? How much asset will it invest itself, and how much will it farm out? I see a bright future for Lou, but then I said that about Qiu Xiaohua earlier........

Beijing Appoints Official To State Council Position

By RICK CAREWMarch 7, 2007

BEIJING -- China confirmed the appointment of a senior Finance Ministry official as deputy secretary-general of the State Council yesterday, to lead preparations for a new agency that will more actively manage the country's foreign-exchange reserves.

Lou Jiwei, 56 years old, formerly a vice minister of finance, has been promoted to the ministry-level post, the State Council said on its Web site.

A person familiar with the situation said in February that Mr. Lou would be appointed to the position. Yesterday's government statement didn't mention his role in the agency, which is expected to manage a portion of the country's $1.07 trillion in reserves.

Financial markets are closely watching China's plans for the new entity -- in the works since late last year -- for signs of how much of the country's reserves will be shifted out of safe assets such as U.S. Treasurys and into higher-yielding, more-strategic investments.

Economists expect between $200 billion and $300 billion of the reserves to be allocated to the new agency.

Mr. Lou, an English speaker, was a key member of former Chinese Premier Zhu Rongji's unofficial brain trust of young economists, alongside current People's Bank of China Gov. Zhou Xiaochuan and China Construction Bank Corp. Chairman Guo Shuqing. Under Mr. Zhu's leadership all three helped shape China's financial overhauls in recent years.

Mr. Lou is known as one of the architects of China's 1994 tax overhauls, credited with boosting national revenue and strengthening the central government's grip on provincial governments.

He holds a master's degree in economics from the Chinese Academy of Social Sciences, a prominent government think tank and educational institution, and has served in numerous financial-policy positions in the government.

Before becoming vice minister of finance, he was a vice governor of the southwestern province of Guizhou.

Few details have emerged about the exact scope of the agency's investment. Vice Premier Zeng Peiyan has advocated that China invest more of its foreign-exchange reserves in strategic assets such as oil.

Mr. Lou's title of State Council deputy secretary-general indicates the new agency will be managed directly by the State Council, rather than fall under a particular ministry's authority.